Question

Piechocki Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 6,800 units, but its actual level of activity was 6,750 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May:

Data used in budgeting:

	Fixed element per month			Variable element per unit
Revenue		-		$	34.30
Direct labor	$	0		$	6.30
Direct materials		0			13.90
Manufacturing overhead		38,000			1.80
Selling and administrative expenses		25,600			0.30
Total expenses	$	63,600		$	22.30

Actual results for May:

Revenue	$	232,600
Direct labor	$	41,890
Direct materials	$	94,925
Manufacturing overhead	$	44,000
Selling and administrative expenses	$	30,480

The revenue variance for May would be closest to:

Answer 1

Particulars	Amount ($)
Actual revenues (Given)	232,600
Less: Total revenue under Flexible Budget [6,750 x $34.30]	231,525
Revenue Variance [$232,600 - $231,525]	1,075	F (Favorable)
Hence, the Revenue Variance for would be $1,075 F (Favorable)